How many times has an emergency fund saved you from digging into your wallet for that credit card?
Given our unsettling career position right now we are focusing on building a 'loosing your job sucks, but I'm going to be prepared for it' emergency fund. Will that fit in an ING description?
I can't describe how much this blows. The sailor and I had plans of disbursing our cash in all different directions. Almost like throwing it into the wind, except for not as stupid. Roth's, 529's, home repairs/remodels, vacation plans and other whims are all put on hold while we focus on this one thing. I thought we didn't have to follow the expert advice of building the emergency fund first and then work on the rest. I suppose the experts know what they are talking about.
So, here come the puzzles. How much and how liquid?
What is enough?
Our plan from the beginning was to do a nine month emergency fund. Six months just doesn't sound like enough and one year sounded like too much. This nine month porridge fund sounds just about right.
Since we have a budget in place and have been tracking our spending we really have a good feel to what our month expenses are. Multiply that by nine. Ta-da! Emergency fund calculations. That's the easy part. The hard and depressing part was realizing we only have about 6% of our goal in emergency savings. Wah-wah!
How accessible should it be?
There are different schools of thought on where you should or can keep your emergency fund. Our situation is a bit different since we know this to be real possibility and not just something sprung upon is. For now we will keep it in a Money Market Savings Account. I like the idea of being able to access it easily.
I know this is going to take time to build. If everything doesn't work out we will have about 6 or 7 more months of employment. This is going to be crunch time for us. I will be applying my I'm-serious-about-getting-out-of-debt attitude to this cause. I think I feel some challenges coming on.
p.s. Thank you to everyone for your well wishes and thoughts. I really do appreciate it and you helped make me feel better, for sure.